Zymeworks stock is a buy, Paradigm Capital says

Clinical-stage biopharmaceutical company Zymeworks (Zymeworks Stock Quote, Chart TSX, NYSE:ZYME) reported on Monday that Eli Lilly, one of ZYME’s pharma partners, has filed an investigational new drug (IND) submission for one of its ZYME-partnered immuno-oncology antibodies, an event which shows the high value of Zymeworks’ technologies and proprietary drugs, says analyst Rahul Sarugaser of Paradigm Capital.

Vancouver-based Zymeworks calls the IND filing “a new development milestone” in its collaboration with Eli Lilly.

“We believe that Lilly’s submission of a second IND on an Azymetric bispecific drug candidate within a six-month period is further evidence that Zymeworks’ platform technologies are enabling our global pharmaceutical partners to accelerate drug development into the clinic,” said Ali Tehrani, Ph.D., President and CEO of Zymeworks, in a press release. “As one of our first collaborators, Lilly’s successes demonstrate the ease of use, productivity and promise of our proprietary platforms, especially for advancing therapeutic programs into the clinical setting.”

The FDA filing comes with an $8-million milestone payment from Eli Lilly to Zymeworks. Sarugaser states that together with ZYME’s first partnering agreement with Eli Lilly, the two deals are worth up to $474 million in royalties upon achievement of all milestones.

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“Triangulating the timing of this IND submission with Lilly-sponsored bispecific antibody trials, we speculate the company’s ZYME-partnered drug is being investigated in a Phase 1 trial in patients with advanced solid tumours,” says Saruagser in a research update to clients on Monday.

“We speculate that Lilly’s ZYME-designed drug will be applied in immuno-oncology, underscoring the high value of ZYME’s technologies and proprietary drugs,” he says.

The analyst is maintaining his “Buy” recommendation and $30.00 target for ZYME, which represents a projected one-year return of 36.5 per cent at the time of publication.